quorum call:

mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: i ask unanimous consent the call of the quorum be terminated. the presiding officer: without objection. mr. reid: mr. president, this senate is a place where we make friends we have our differences on policy but we really are a senate family. and it's just not that way with democrats who work here in the senate. it's also with republicans. when we work together, which we do outside the view of most of

the public, we work well together. and one of the troubling things for me, as i'm sure it is all of us, when someone who is a part of the family leaves, and especially it applies when you feel so close to the family member that's leaving. today the democratic cloakroom, the nerve center of the senate, and the entire senate community say goodbye to a dedicated staffer, tequia delgado. we congratulate her on her role as member relations advisor for the white house. after graduating from southern illinois university in carbondale university she started her senate career as a staff assistant in my office. but even before that she spent the summer interning for this brand-new senator, barack obama.

in 2007, tequia joined senator durbin's staff. i've never forgiven him for that, for taking her from me but he's done a lot of nice things so i guess i'll sweep that under the rug. but i don't think i've gotten over that. i told him more often than not that he stole her from me. but those things happen. and on a serious note, it was the right thing for her. it was an advancement for her, and she's from illinois and it's worked out well for her. she became director of constituent services and legislative correspondent for senator durbin, my dear friend. despite her hard work in my office and that of the assistant democratic leader, senator durbin, she found time to perform as a cheerleader for the washington redskins for three years. these are difficult jobs. they practice like football

teams, and it's hard. they have tryouts. it's really quite an honor. and so we've always recognized her for this accomplishment, and that's certainly what it is. when she joined the cloakroom staff in 2010, she brought her warm personality and really positive spirit to her new role then. so for four years tequia has worked in the cloakroom, i repeat the nerve center of the stphaeupt and she's -- united states senate and she's been an invaluable resource to all senators. she's been an important mentor for senate interns and pages. she's been a valuable teammate and friend to her colleagues. her talent, dedication and friendly demeanor will be missed by me and members and colleagues alike. i wish her well in this next

endeavor. i know she will perform admirably and we're fortunate she'll continue to work closely with the senate community. that's her job in her new role as a member of the white house team. congratulations tequia and best of luck to everything you do in the future. the senate will now proceed to a period of morning business with senators allowed to speak for ten minutes each. the presiding officer: without objection. mr. reid: s. 2077 is due for its first reading, i'm told. the presiding officer: the clerk will read the taoeults of- title of the bill. khro*eup -- the clerk: 1*s 2077, a bill to provide for unemployment extension. the clerk: objection having been heard the bill will be read the next day. mr. reid: i ask unanimous

consent when the senate adjourns it adjourn until 10:00 tomorrow morning and the time for the two leaders be reserved for use later in the day. following leader remarks the senate proceed to executive session to consider the nomination of debo adegbile under the previous order. the presiding officer: without objection. mr. reid: mr. president, he's a fine man and the fact that i don't pronounce his name very well takes nothing away from his credentials. he's really an outstanding individual. i'll have more to say about him tomorrow. there will be up to three roll call votes at 11:45 tomorrow. we expect to recess following those votes for our weekly caucus meetings and continue to work throughout the day on nominations and other business that we have. if there is no further business to come before the senate, i ask it adjourn under the previous order. the presiding officer: the senate stands adjourned until senate stands adjourned until

look at president obama's 2015 budget being brought into the capitol today. the "associated press" saying congress was sent a 3.90 in dollar budget that would be funded into programs and the

democrats playbook and narrowing the income gap between the rich and poor. the blueprint for fiscal 2015 which begins october first includes new spending for preschool education and job training expanded tax credits for 13.5 million low-income workers without children in more than a chilean dollars in higher taxes over the next decade mostly for the wealthiest americans and corporations. the president judd is his budget and met earlier today washington d.c.. here's a look. >> we also know the most effect if and historically bipartisan ways to reduce poverty and help american families pull themselves up as the end -- on earned income tax. this budget gives millions more workers the opportunity to take advantage of the tax credit and it pays for it by closing

loopholes like the ones that lets wealthy individuals classify themselves as a small business to avoid paying their fair share of taxes. this budget will also continue to put our fiscal house in order over the long-term by putting the burden on folks who can least afford it i reforming our tax code and our immigration system and building on the progress we have made to them decrease health care costs under the affordable care act. it puts our debt on a downward path as a share of our total economy which experts have said is a critical target for chris chris -- fiscal responsibility. as i said at the outset the budget is about choices. it's about our values. as a country we have to make a decision if we are going to protect tax breaks for the wealthiest americans or for your going to make smart investments necessary to create jobs and grow our economy and expand opportunity for every american. at a time when our deficits are falling at the fastest rate in

60 years we have got to decide if we are going to keep squeezing the middle class or if we will continue to reduce the deficit responsibly while taking steps to grow and strengthen the middle class. the american people have made clear time and again which approach they prefer. that is the approach my budget offers and it's why i'm going to fight for it this year and the years to come as president. >> the new c-span.org web site gives you have says to an incredible library of political events with more added each day through c-span's nonstop

coverage of national politics, history and nonfiction books. find c-span's daily coverage of official washingtwashingt on are accessed more than 200,000 hours of archived c-span video. everythineverythin g c-span has covered since 1987 and our video is all searchable and viewable on your desktop computer, tablet or smartphone. just look for the prominent search bar at the top of each page. the new c-span.org makes it easy to watch what's happening today in you can and find people and events from the past 25 years. it's the most comprehensive video library in politics. see the government accountability office health care director kathleen king testified on capitol hill today but for the house energy and commerce subcommittee on health. the hearing looked into the role that centers for medicare and medicaid contractors play in the management of the medicare

program to enhance the overall effectiveness and reduce waste fraud and abuse. kathleen king is joined by gao health care team director james cosgrove and hhs inspector general for evaluation. this is about an hour and 10 minutes. >> is subcommittee will come to order. the chair will recognize himself for an opening statement. in fiscal year 2014 the medicare program will cover nearly 54 million americans. and the congressional budget office cbo estimates that total medicare spending will be approximately 600 $3 billion. 591 billion of which will be spent on benefits. according to the department of health and human services fy2013 agency financial report the proper payment rate for medicare

fee-for-service, f. f. s. was 10.1% last year. adding in the improper payments for part c and d with error rates of 11.4% and 3.1% respectively. improper payments totaled over 49.8 billion dollars. independent estimates the real cost is much higher. why are these figures important? the medicare trust fund is set to go bankrupt sometime in the next decade. absent congressional action the congressional research service has stayed apart 1-800-and if it's cannot be paid out while the trust fund is insolvent. that is simply unacceptable. we cannot afford a future where our seniors hospital bills go unpaid. every taxpayer dollar must be protected.

some of my colleagues have suggested that eliminating the multibillion-dollar losses due to inefficiency and fraud will alone fix the insolvency problem that claim is frankly false. while reducing waste fraud and abuse and managing the program more effectively should he an administration priority, that alone is not enough to address medicare spending problem. however critics are correct that a congressional solution is needed. we must do everything in our power to safeguard the money in the trust fund until such time as congress accepts its responsibility to make structural changes to save the program and the millions who depend on it. editor uses a variety of contractors to and assist in delivering benefits and carrying a program integrity and oversight functions. many of these contractors have experienced fighting fraud and

efficiently managing health insurance programs yet sometimes federal law or administrative areas prevent us from using their expertise to prevent fraud and mismanagement in the medicare program. other times all that is missing is a dose of common sense and leadership. this committee has for years studied the problem and reviewed potential prop -- programs to fight waste fraud and abuse. this is not one of these hearings. today's hearing is an opportunity to hear from experts about the challenges cms faces in administering the program. in fact today's hearing is a first step toward a broader long-term effort to build consensus about the best ways to modernize the medicare program. in its management and accountability in the best way to strengthen medicare is to help improve and modernize the business model of the agency that oversees the medicare program ,-com,-com ma cms. the purpose of today's hearing is to examine how cms currently uses and oversees these

contractors to lessen program vulnerabilities and protect seniors benefits by increasing accountability and cost effectiveness. long-term i hope to work with my colleagues to fight barriers in the federal law and within cms itself that prevent contractors from finding what -- fighting waste deficiency fraud and abuse. i'm pleased to have witnesses from both gao and the hhs with us today. to discuss the types and functions of medicare contractors and how the program can better manage them to meet its goals. i would note that the hhs oig is releasing two new reports today on these topics and i look forward to the testimony of all of our witnesses. with that i will yields back and recognize the ranking member for five minutes for an opening statement. >> thank you mr. chairman for holding today's hearing on the management of medicare.

for nearly 50 years medicare has served as the bedrock program for nation seniors and disabled which started as a basic benefit covering hospital stays and doctors visits has continuously evolved and encompasses conference of health care coverage that millions rely on but in order to build on the promise of the program congress and the administration must continue to find ways to strengthen the program so it works better or beneficiaries and taxpayers alike. the centers for medicare and medicaid services known as cms is tasked with the critical role of administering the program to 50 million beneficiaries. since medicaid's inception cms has enlisted a number of different contractors in different ways throughout the program to help the system in that responsibility. in parts a or b these contractors to help pay the millions of claims to providers as well as enroll providers. the medicare advantage and part b benefits cms utilizes the

private sector specifically private insurers to administer the benefits directly to beneficiaries. in addition cms in less benefit integrity contractors to help further root out waste, fraud and abuse. all these instances however cms is responsible for overseeing all the contractors performance and ensuring they bring value and quality to the program. it's also see mrs. role to conduct oversight of lands to ensure that the payments are legitimate and appropriate while simultaneously serving beneficiaries as well. that is why last summer i introduced the part b prescription drug integrity act of 2013 which i believe can help cms address potential factors and shooting to prescription drug abuse. i wrote the bill on the heels of a report by hhs office of inspector general they oig which found medicare is paying for prescription drugs prescribed by unauthorized individuals. given the tens of thousands of these drugs substance is the

study's findings raise questions about patient safety because of the high potential for abuse and diversion. my bill would require a response to verify the prescription for a drug on the controlled substances list is made by an authorized physician before paying for the drug. under the current law such a requirement does not exist. it would also require transponders to have drug utilization programs in place that would restrict access if there was credible evidence of beneficiaries abusing or diverting drugs. in addition the bill would provide cms tools to prevent the payment of claims by fraudulent prescribers or pharmacies. i think we can all agree that this necessitates constant work in my bill is one of many ideas to improve medicare moving forward. the affordable care act made great strides in expanding benefits to seniors brought payments to, closer to traditional medicare. it also gave cms oig and tmj increased authorities to address fraud and since its passage the

administration has recovered $20 billion to taxpayers. of course last week this committee heard directly from cms about the ways in which they hope to continue to strengthen part the mac through a number of different policy so i applaud the for the work it has done to date and i commend their strong commitment to fighting fraud waste and abuse in the medicare program. the data clearly shows we are moving in the right direction but as we will hear today more can i speak on an exact oig will issue two reports identifying a number of flaws and oversight in the part b lands in the benefits they provide specifically regarding data collection. i look forward to hearing more about these recommendations and in fact mr. waxman and i hope to quickly adopt these improvements. let me thank our witnesses for their participation work on this topic. the gao and oig offer critical insight that informs most cms and the congress of what continues to need improvement

and together we must all commit to improving the quality and efficiency of medicare and be responsible stewards of taxpayer dollars. robust and aggressive oversight of contractors is critical to this mission. thank you mr. chairman and i yield back the rate -- remainder of my time. >> the chair recognizes the ranking of the full committee mr. waxman for five minutes for his opening statement. >> thank you mr. chairman. for more than four decades medicare has been a critical program for ensuring the health and also the financial well-being of seniors and people with disabilities. the program has evolved significantly over that time adding benefits, adding coverage options and becoming a major force in the u.s. health care market. as the program has grown and changed, so too has the oversight role of the centers for medicare and medicaid services or what we call cms.

cms works with private contractors especially in the original medicaid, the fee-for-service program to perform the day-to-day program operations such as paying claims, enrolling providers and conduct the first level appeals. in parts c and d of medicare cms contracts with private insurance companies to deliver medicare's benefits. in either case cms is ultimately responsible for making sure that the medicare trust fund dollars paid to these contractors are used appropriately and soundly. we know from past experience that without strong oversight from cms contractors did not always perform adequately and have the potential to abuse the public trust. i'm glad we will be hearing from both the office of inspector general, oig and the government

accountability office, gao, today. these two organizations have been critical watchdogs for the medicare program alerting us to instances where medicare's oversight should be strengthened and also areas where federal intervention is necessary to ensure that taxpayers dollars are being used appropriately. a lot has been achieved since passage of the affordable care act to strengthen medicare. medicare growth rates have been at an all-time low. this success in reducing the rate of spending growth has been achieved at the same time that benefits have been increased and out-of-pocket costs have been reduced for beneficiaries and fraud fighting activities have been more successful than ever. just last week hhs announced that the heat strike forces successfully recovered

$4.3 billion in taxpayer funds the highest annual amount recovered to date for a total of $19.2 billion in recoveries over the last five years. the administration continues to work to improve the program. the administration's proposed part d regulation would make a number of changes to the program to strengthen program management and integrity. some wanted to resend this regulation but if we are truly serious about program integrity those program activities are -- cms should be taking. to all y. g. reports released today no significant concern with reporting of fraud and abuse in the medicare advantage and part b program. there is wide variability in reporting and many have failed to report any potential fraud and abuse incidents at all.

cms needs to do a better job managing the private insurance companies that participate in medicare. what congress needs to do is give cms the funds to do its work. we all know that cms budget has been inadequate in recent years. for example while cms has added nearly 3 million beneficiaries to the medicare program over the last two years, the funding provided by congress to administer the medicare program and fight fraud waste and abuse has remained essentially flat. whether we are talking about up or be a funding for nursing home certification, funding for claims processing and provider education or funding for the implementation of the affordable care act. we should not let our austerity get in the way of rubber program management.

i am concerned that is just what is happening. starving the agency is no more justified in voting to kill medicare outright by enacting chairman ryans voucher plan. all things considered this administration has done a remarkable job of improving program oversight and management that we do have more work to do so i am pleased we will be hearing about those areas for improvement today. in closing i would like to make sure that my message is clear. is the medicare program and effective program? c.s.. are there opportunities to improve medicare management, oversight in overall performance? up course and we can do that without harming beneficiaries. thank you. >> the chair thanks the gentleman and all the opening statements will be made part of the record. we have one panel before us today. ms. kathleen king director of

the accountability office is our first witness. dr. james cosgrove director of health care u.s. government accountability office. our second with this mr. robert vito original inspector general for evaluation and inspections office of inspector general u.s. u.s. -- thank you very much for coming today. your wit testimony will be made part of the record he will have five minutes to summarize your testimony. at this point the chair recognizes ms. king for five minutes for opening statement. >> chairman pits ranking member pallone and members of the subcommittee my colleague james cosgrove and i are pleased to be here today to discuss the role that contractors and private plans have in the medicare program. cms relies extensively on contractors to assist it in carrying out its responsibilities including program administration

management oversight and benefit delivery. contractors have played a vital role in the administration of the program since its enactment in 1965. in fact congress designed the original medicare program so that it would be administered by health insurers or similar organizations experienced in handling hospital and physician claims. congress also stipulated the process for selecting contractors which differed from the way that most other federal contractors were awarded in that medicare contracts were not awarded by a competitive process. beginning in the 1980s the department of health and human services asked congress to amend its authority regarding the selection of contractors. it wanted to open the process to a broader set of contractors and increase its ability to reward contractors that were performing well.

in the medicare modernization act of 2003 congress repealed the statutory limitations on the types of contractors that cms could use and required compliance with the federal acquisition regulation and competitive procedures to select new contractors. congress also required cms to develop performance standards for the new contractors called medicare administrative contractors and gave cms the authority to provide incentives to contractors for good performance. they are responsible for a wide variety of claims administration functions including processing and paying claims, handling the first level of appeals and conducting medical review of claims. cms is responsible for overseeing the max. over time congress has also authorized the use of other types of contractors in medicare for program integrity purposes

area and unlike medicare fee-for-service in which contractors process and pay claims in medicare part c medicare advantage cms contracts with private organizations to offer help plans that provide all medicare covered services except costs and may provide other services not available under fee-for-service. cms first began contracting with private plans to provide care to enroll beneficiaries in 1973. over time congress has made various changes in the program most notably paying plans on a risk basis. as of february 2014 nearly 30% of medicare beneficiaries are enrolled in medicare advantage which is an all-time high. while medicare contract requirements and program parameters are largely derived

from statute cms has responsibility to implement the program and assure compliance with requirements. while medicare part c or bites an alternative to obtaining care benefits through fee-for-service congress structured the medicare part d a-gram to provide benefits only for private organizations under contract of medicare. prescription drug benefits are provided either through medicare advantage plans or stand-alone private plans. medicare pays sponsors a monthly amount per-capita independent of each beneficiaries drug use. the part b program relies on plan sponsors to generate a script and drug savings through negotiating price concessions with the entities such as drug manufacturers, pharmacy benefit managers and pharmacies and managing beneficiary use of

drugs. as with medicare advantage while cms contracts with plan sponsors to provide the part b and if it is responsible for administrative the program including ensuring that payments made to plans are accurate and the data plan sponsors submit are accurate. mr. chairman this concludes our prepared remarks and we will be happy to answer questions. >> the chair thanks the gentlelady and recognizes dr. cosgrove for five minutes for a public statement. >> chairman pitts thank you very much. ms. king has submitted a joint statement for both of us covering gao. >> the chair recognizes mr. vito for five minutes for his opening statement.

>> pull it closer. >> all right, try that. >> is that any better? thank you very much. good morning mr. chairman and members of the subcommittee. i am robert vito regional inspector general for the office of the valuation inspections at the u.s. department of health and human services office of inspector general. thank you for the opportunity to testify about cms oversight with medicare contractors. two years ago i testified before you about recurring problems that we had identified with cms integrity contractors. cms relies on contractors to administer half a trillion dollars in medicare spending every year. oig understands effective oversight of the medicare contractors is continuous, demanding and resource intensive process for cms. and for choice in the same problems we identified in the past with cms oversight of

contractors also extend to other cms contractors. today the oig is releasing two reports that highlight similar oversight problems with medicare advantage and part b. the oig has found that cms does not leverage data to improve oversight, does not investigate variations in data across contractors, does not address underperforming contractors timely and require corrective action plans and does not share informatiinformati on with beneficiaries and other stakeholders that could assist on -- anti-fraud efforts. since 2008 we have repeatedly recommended this team is require part b plans to report fraud and abuse data rate rather cms merely encourages part b plans to -- these data. under this voluntary reporting system less than half of the part b plans have reported data and the reported data have varied significantly across plans. due to cms's failure to

investigate variation among plans we did not know for plans are reporting encrypts data have been effective programs to detect fraud and abuse or lack a common understanding of what constitutes a potential fraud and abuse incident. further without detailed information on fraud and abuse incidents cms is missing discovering plans and fraud in the use schemes. cms has made use of part c data to oversee medicare advantage plans despite investments in contractors review of the data. the part c reporting requirement data are a significant resource for oversight and improvement of medicare advantage. cms has implemented regular reviews of the part c data to its contractor but conducted minimal follow up on the data issues that it identified. for example cms has not determined if outlier data reflected inaccurate recording

recording -- reporting or typical plant performance. cms also is not used its contractor data reports in the palaces to inform the selection of plans for audits or to issue compliance notices for performance concerns. this would be like taking your car to a mechanic having them run diagnostic tests and then not using the test to determine if your car is running well and safety drive. our review of the mac contractors found cms performance reviews of macs were extensive but not always timely and human cms identify qualified standards cms did not always resolve the problem. there were two macs that consistently underperformed but these macs have their options renewed. lastly cms is missing a critical opportunity to enlist millions of medicare beneficiaries in the fight against fraud. max medicare summary notices to beneficiaries to show them what medicare claims have been paid

on their behalf. these notices can serve as a key fraud and detection tool when beneficiaries identify reports suspicious information contained on their msn's over the oig found over 4 million notices were not delivered to the beneficiary. further cms is not instructed maxson whether or how to track her follow up on delivery of msn's. it is critical that msn msn's be timely and properly delivered to beneficiaries. if just one beneficiary sees something suspicious on their noticed and reported to medicare it might lead to a fraud case it saves millions of dollars. in conclusion the oig recognizes the challenging jobs cms faces in the oversight of its contractors. oig has recommended actions that cms can undertake and now cms is considering some of these recommendations. thank you again for your interest in this important area and for the opportunity to testify before the subcommittee today. >> the chair thanks the

gentleman and we will now begin questioning. i will recognize myself for five minutes for that purpose. mr. vito cms likes to tout that it has moved away from a -- chase system and one of the programs they have pushed to support this claim is the fraud prevention system which congress mandated in the small-business jobs act of 2010. the system is supposed to scan claims on a prepaid vases and proactively flag problematic claims for review. the last report found that the inspector general's team could not validate most of the resulting savings from the program. do you expect that to change this year? >> i don't know the answer but i can tell you that we will be having a report in that report will do the same things that

last year's report did in that report i believe will be coming out how boldly in the next three or four months and you should have been in front of you and you will be able to see the results of our work. >> do you know how many claims if any cms actually stopped before they were paid as a result of the system? >> i do not know that answer. i am not familiar with that review that i know that review is ongoing and we will have the results for you. >> and do you have any ideas of how to make the system stronger? >> we certainly have some ideas on how to make the system stronger. one of the ways is we require plans to report fraud waste and abuse. i think once they do that in cms will have data that will indicate the types of fraud incidents it will also tell you the amount of them. once you have data then you can analyze that data and use that data in conjunction with other data to find out more

information that you never had. >> ms. king cms is developing a new integrity contractor called a united program integrity contractor. you pay. these contractors will focus on both medicare and medicaid integrity issues and the zone program contractors and the medicare administrative contractors the macs will be folded into the u. base. is this an important change or are we just rearranging the deck chairs and relatedly has her office seen better results since they were developed out of the safeguard contractors? >> mr. chairman we did a review that was released last fall of and we found that they did have a positive return on investment. they spent a little over $100 million they saved about

$250 million during that time. we did make some suggestions for improvements but we did see a positive rate-of-return from map and i think in terms of the consolidation of the program integrity contractors to medicare and medicaid integrity contractors are going to be combined into one. we have not evaluated that but we did find faults fault with some of the medicaid program integrity of work. but i do believe that the macs are going to remain as they are and not be folded into that because while they do have some program integrity functions, one of their primary -- one of their primary purposes is processing and paying claims and that will remain. >> dr. cosgrove to you have anything to add? >> no, i don't. thank you. >> continuing, to help manage

the program cms often uses cost-plus contracts but if the contract team at seamus writes a contract that manages the wrong things like outputs instead of outcomes then cms has to spend millions of dollars perhaps on the wrong thing. how can this be prevented? >> you are right that they do use cost plus contracts under the federal acquisition regulation and that is one of the things that congress authorize them to do during contractor reform. we are now looking at some of the incentives that are provided to the macs under their contracts to see if perhaps there could need better incentives put in the contracts. and in some cases in contracts we evaluated recently the fraud and abuse control program, it's

hard to measure outcomes there because we don't know what the baseline is. we don't know what the baseline is for fraud so that is an inherent challenge. >> my time has expired. the chair recognizes the ranking member for five minutes for questions. >> thank you mr. chairman. i want to ask mr. vito a question. today a report was released on some of the shortcomings of medicare advantage and it sounds like there's a lot of work to do in order to improve the fight against fraud and abuse. first tell me do we know how much fraud and abuse is happening in medicare advantage and second what kind of data is cms collecting and what what additional day to do so ig believe should be collected? >> in the part b area cms has not voluntarily, cms has voluntarily collected -- they

have only voluntarily collected the information that we have requested. we have asked that they mandatorily report that information. that information would allow them to determine the number of fraud incidents is that occurred and it would also let them know if -- it would let them know if the part b plans had addressed those fraud incidences. by doing that information it will provide information among all the different plans and then the plans -- cms could analyze that to find out which plants have higher numbers are lower numbers and they could look into the variations and see what might be going on there. >> i know from your report that while cms to conduct reviews of data reporting under part c the agency did not conduct follow-up of the data or look at outliers and it's not enough to simply collect the data that the agency must act on it.

what is the oig recommend seamus do and how should cms be following up on this outlier -- outlier data specifically? >> cms has collected a contractor that identified outliers. it identified inconsistency in the day they get once they identified that the contractor only share that information with the plan and cms in cms did not do anything with that data. they did not investigate that data. they did not review why that -- the reason behind the data. was it reporting information was incorrect or were they a typical outliers? cms can utilize the resources it has to do that extra step. for example we saw some plans that had the same problem multiple years. depending on the resources that cms has they can target the areas that are the most problematic like the ones that

had multiple years are the one i had three or four elements that needed to be looked at. so it's clear to us, we gave the example. it's like taking your car and having all the diagnostic tests run on the car and then not using the results of that fix the car and make sure it's safe. basically cms has information they are not using the information to get to the best dancers. >> all right. i can ask this of any of you. has a duty to improving medicare program while fostering competition is also critical they take reaction to alleviate fraud waste and abuse. in its proposed rule issued in january cms proposed several provisions aimed at improving program management and integrity including requiring prescribers apart d drugs to be enrolled in medicare providing cms the authority to revoke abusive prescribers medicare enrollment and allowing cms contractors to

obtain information directly from pharmacies and the pharmacy benefit managers that subcontract with part b sponsors. this provision seems like common sense to me but did any of you talk about the problem medicare faces with respect to abuse with prescribing practices? how serious of a problem this event how do we know how part b is dealing with improper prescribing? any of you that could answer this i would like to hear from you. >> i don't know if the answer to the question specifically but we do have people looking at the medicare part d program and integrity contractors and seeing how their practices measure up with the best practices in the private sector so that is a question we should be all the shed some light on but i don't have the answer today. >> mr. vito did you want to say anything about that? >> yes, the office of inspector general has been looking at the part b program for a long time.

we have initially started to look at the controls that were existing in the program. we found that cms had some controls but they were limited and they needed to do more. we had pointed that out to them. we have a body of work that continues to show that they need to do more. the items that you referenced, many of them are direct results of work the oig has identified and pointed out. what we have looked at, the plans and found that the planned some of them have not afforded any information when they have reported they are the first line. we also been looked at the medics and we found the medics could do more. they weren't proactively analyzing data. they weren't doing a lot of things that you asked about, the prescriber i.d.s. we found that they were paying claims that did not have a valid i.d. or prescriber i.d. and you

also reference reports where people were writing prescriptions and they didn't have the actual responsibilities to do that. all these things that you mentioned here are things that the oig has pointed out and need to be improved and that made a lot of recommendations to have that done. >> thank you. the chair now recognizes dr. gingrey for five minutes. >> mr. chair thank you very much and i would like to thank of course all the witnesses for coming to allow the committee to better understand how medicare is protecting seniors benefits and how we can continue to reform the program to save the taxpayers money while at the same time not overburdening providers. i'm going to go to you mr. vito first. this is a hugely important issue that i am sure all members of constituents providers.

those codes are set to be replaced by icd in the actual classification of diseases this october. these new codes as you know include thousands of new diagnosis codes adding new burdens for providers as they attempt to abide by the law. many providers worry that the new complexity could be a target rich environment for authors who might confuse an error for malintent -- malintent. this conversion in october and i think that final rule has been issued to go to the icd-10 code. the providers that i speak to in the 11th district of northwest georgia with big cms to delay this conversion from icd nine

two icd-10. >> i would like to say i believe that we have planned work in that area. i cannot address your specific questions now because we need to determine what the issues are but i do believe we have worked that is planned and it's in our work plan. if you would like we could take that question back for people brief you on that from our office that are more familiar with that work. >> if you could elaborate a little bit more dr. cause growth because the providers even say even that meaningful users of electronic medical records, it was my thought that would kind of solve the problem. it would just be automatic and they say no. it's not going to help at all. do any of you have any thoughts about back?

>> it's not an issue that we have looked at yet. all of our work is evidence-based in while we agree that documentation errors are a big part of what contributes to improper payments i think we would have to look at the implementation and assess its effects before we could comment on it. >> just for those that are here, that may not be as up on this issue as you are and hopefully as i am but i mean it's like a physician, if there is a code now there would have to be a code in that code would have to be what was the breed of dog and on and on. you get the idea but it gets a little ridiculous and that is where you have thousands of additional codes that you have to worry about. i heard from my colleagues on the other side of the aisle that

if we could only fix waste, fraud and abuse than the medicare program would be there to solve it for my children, my four adult children and my 13 grandchildren. we wouldn't have to do anything else. jaron ryan on the budget committee has been criticized many times for trying to come up with innovative solutions to deal with the $75 trillion worth of unfunded liability in social security and medicare as we got into the future 50 years from now. ..

>> i'm going to stop you right there. no one to make one closing comment. mr. chairman, the administration intends to constrain fraud and abuse need to meet the program's integrity recommendations provided by gao. we must make sure that these gentlemen are not overly burdened to providers, do not overly penalize them are honest mistakes. it is clear, however, in my opinion that program integrity provisions along well not provide a sustainable medicare program for the future. it is my hope that my colleagues take a more serious look at structural reforms for medicare

that will create a sustainable program which continues to provide health care services and peace of mind for our precious seniors. thank you, mr. chairman. i yield back. >> now recognize the gentle lady from the virgin islands. >> thank you, mr. chairman. thank you for this hearing. i want to associate myself with my colleague, his remarks about not placing an undue burden on our providers or mistakenly charging them with fraud and abuse. thank you for this hearing, and i had the experience. i will say that working in the operations of our contractors have really improved in the virgin islands and pr, but i still do get some complaints. i hope hours is not one that is

underperforming and still having their contact -- contracts renewed. despite the improvement there seems to be a lot of space in your testimony calla a lot of room for improvement. i have a couple of questions. the first one relating to the affordable care act which strengthens the medicare program in many aspects, not only in passing program benefits but anti fraud and abuse efforts. for example, the dca provided new enrollments and screening authority to we abide provide -- data providers to place a moratorium on provider and romance. so can you tell us more about cms? using the new program and integrity tools that were enacted as the medicare program improved as a result of these provisions in the affordable care act?

>> we looked at the provisions in the new enrollment process is shortly after they were enacted and win cms was in the process of implementing them. since then we have not gone back and taken another look, but i do know that cms has used its authority to impose moratorium's nondurable medicare equipment on home health care provider since then. >> well, the office of inspector general is doing the exact route that you asked about. we are currently looking at the medicare and roman enhanced provisions that came from the dca command to live a report for you hopefully by the end of this year which would give you details of how well they're doing and if there are any areas that need to be improved. >> so that will give us areas where we must continue to focus. >> we will be able to tell you how they're using their extra activities and what the results are that there are achieving.

>> the legislative actions that anyone of you would recommend congress take in order to build upon the ac a and continue to strengthen the anti-fraud and abuse efforts at this time? >> no. i don't think that we have matters pending before congress. >> well, we have a couple of ideas for you. we have been recommending now that cn has implement a mandatory reporting requirement for part b. they need to have legislation to do it. you can help them achieve that through legislation. in addition we of the think that there might be some flexibility that you want to give cms when the award contracts. this will allow them to not be in a perpetual contacting threepeat node and focus on the people that are underperforming and allow the people that are doing a good job to remain in

the program. this goes back to your question about the max. they are not doing a good job we want to make sure that they take action and to replace those. cms has done a fairly extensive job reviewing. they can do better in trying to address those that have underperformed. >> thank you. ms. kane, we know that medicare administrative contractors have set up a claims processing system in such a way that there will to compare claimed its medicare requirements in order to approve or deny claims are flag them for further review. a 2010 gao report found that the prepayment edits saved medicare at least one-half billion dollars in fiscal year 2010. the savings could have been greater had prepayments at it's been more widely used across the map. this seems like common sense, especially given that these edits can minimize improper

payments being made in the first place. would you give us an estimate of how much greater savings could be if prepayments at it was more widely used and can you tell us more about your recommendation? >> thank you for that question. use of prepayment is critically important to prevent the improper payments because they do all kinds of things. to see if the provider is eligible to participate, if the beneficiary is eligible, and then look at whether the services covered by medicare. in some cases and make decisions about whether the service is necessary in that situation. i don't think we have an estimate of how much, you know, more could be saved if there was greater implementation of prepayment headed, but we made a number of recommendations to refine the process and make it clear.

>> i would like to say -- i would be remiss if i did not say this. if congress can consider funding the 0ia g. foley i think that it would benefit the program. we have an 8-1 return. you give us $1 we get a back. we have been in a hiring freeze. we are not able to do the work that we would like to do. you're able to fund as we can achieve these results. i would like to bring that to your attention. >> the chair thanks the originally in now recognizes the gentleman from illinois. >> thank you. giving me a chance to promote one of my colleagues from illinois. the prime hacked at pressing the issue which was mentioned in some of the opening statements. i want to make sure i put that on the record. mr. vito, using your analogy if

once a cadillac or someone has payments, one is a buick, and the chevy, the payment per month is $350 per year, and you propose cost savings of $250 per month to all these payments and the individual cannot afford any of those cars, does that saved them from losing their vehicles? >> i think in the analogy that you gave it does not, that was not -- >> i'm just starting. i'm just warming up. so if you would put the chart on your -- and that is what he was talking about. and that is where we are today.

there read is that mandatory spending. the blue is the discretionary budget on when we have our budgetary fights and shutting down of government. it is only that blew section now we are fighting on. this is the whole debate. and mr. cain and dr. cosgrove, you answered correctly. we can save a couple billion dollars here and there. but that fundamentally does not affect solvency of our mandatory programs. it is almost like pocket land. now, it is good to get that out of your pocket, but it does not fundamentally affect the solvency issue. in fact, my friend who i just followed talked about obamacare or the ac a. it took seven or 16 billion out of medicare. and we had a hearing last week on medicare be.

that is changing to pay for this expansion. so i want to ask said to recoup 4 billion but roughly half. roughly half of that was due to settlements with pharmaceutical companies. that leaves about 1 billion in actual recouped money for year. can you give me a sense of what that amount is in the scope of the overall medicare spending? if we are just using 2012 we have 1 billion savings, 466 billion in the overall cost.

it's good for resin make, but it is not really good for solving the problems of medicare. >> we are responsible for doing our work, and that is to identify fraud, waste, and abuse as well as to make sure the programs are running as efficiently as possible. we are doing that. and you're right. that 1 billion, we actually, we have good results. i think the point it trying to make is that it is a very challenging program and they're is a lot of money. >> challenging because you're going broke. my colleagues on the other side will not accept that premise. they just will not accept the premise that we have to actuarially make them change. let me go to a specific part of the report. as part of its efforts to reduce medicare fraud and abuse cms

realize on spaces -- suspicious activity identified. medicare summary notices are paper for is the summarized process claims. your office found that over 4 million medicare summary notices mailed to beneficiaries were not delivered in 2012. in the time remaining, whenever of the chairman allows, can you talk to that issue and that problem? >> yes. >> basically telling you what services medicare as belfort. cms says said it is the best defense against fraud that will beneficiary can do. in new york there was a case where a beneficiary saw they noted that the services that

were being built they did not receive them. they started the case. the case was a $10 million case. so when you look at the ms in their critical pieces of affirmation that i personally got an msn, not from medicare. but there was some indication that i was having a procedure that was only give for woman. i looked at that and was able to call that in and then resolve that. so that is one of the best tools just one beneficiary looks at that. result in $10 million. >> about the not being held out. >> i can. they had no totals.

we actually went to each back and asked each one to tell us how many they had that or not getting to where they needed to be. this is important because without knowing that this had already been pointed out to cms two times previously. >> the chair thanks the gentleman. >> the first question is for the panel. the irs does an estimate of how much money they should be collecting compares this gives them a sense of how many people and not complying with the tax code. we report on how much money is

recovered from fraud arrests and without any measurement of the fall. it's hard to know how much of a difference for making. have you ever done an official estimate of fraud in the medicare program. >> part of the difficulty is it is hard to measure what we don't know about if, for example we submit a claim for a service that was never provided. >> that is a fraudulent claim. there are things like that that happen that are not captured in that. we have noted the lack of reliable estimates of fraud and medicare and urged cms to work on it. i believe that they are starting on a pilot to measure the extent of fraud in home.

it is a difficult undertaking. but they are working. >> what do you expect the pilot to be rolled out? >> i think that they just talked about it in the most recent report that was released within the past few weeks. and i would imagine, you know, i can't speak for them because i don't know their exact plans. i would imagine it would take some time. i'm sorry. did you want to finish, ma'am? okay. >> thank you. i don't have anything attack ad. >> i think tried is the only one that is determined. that is when fraud occurs. you can have indications of fraud but it is only when it is finalized and the case has been adjudicated. i think what we are trying to say is that cms needs -- they have data and need more data.

when they have that dated they need to analyze it which would help them identify what is going on in their programs. for example, in that part -- if they get information on what the plans are reporting as incidents of potential fraud they can look behind that and use that data to compare it to fraudulent areas to see if that parts be program is actually doing a good job in detecting and preventing fraud, waste and abuse and compare it to others. fermi i think you are asking about data and the use of data it to make informed decisions and to target your work. that is what we are advocating with cms, that the use the data they have been enhanced more data said that they would be able to target their resources in the best manner. >> thank you. next question. many of the monetary criminal and civil penalties for fraud,

the 80's and 90's. the you think these monetary penalties should be updated? >> i don't have the expertise to comment on that, sir. >> okay. >> we have not done any work in that area. >> i am not a lawyer or a prosecutor. i can tell you, though, we have those people. we would be certainly willing to answer your questions are meet with you to talk about your questions. >> that's fine. i mean, if they were -- if the penalties were established in the 80's and 90's, that was a heck of a long time ago. i would think it would be updating. i would like to get with you. >> i think we could certainly meet with you. >> next question, and g a. o has medicare listed on their high-risk program. it has probably been on the high-risk program and then some of my staffers have been alive.

has cms done anything recently or in the foreseeable future that would move medicare off of the high-risk program list? who would like to respond first? >> i well, sir. we are in the process of updating our high risk report for the next issue lens. medicare is an inherently complex -- it is an expensive program. it is, as noted, you know, taking up a larger share of the federal budget and national spending each year. it is an intrinsic the complex program, but we are in the process of evaluating whether it should continue to be on the high-risk list. it has been there since 1990, the very beginning. >> thank you. thank you. >> i just want to comment on one of the efforts underway regarding medicare advantage. in the process of collecting

counter data. we better understand the services that they are providing to beneficiaries. the immediate plans are essentially to use this to improve the risk adjustment, the adjusting payments for health status, but the data has opportunities to go well beyond that, allowing cms to do a better job of oversight. we currently have worked on plans and efforts. right now. >> thank you. >> i think that medicare program is certainly a complex program and a large amount of resources have focused on looking at the program. we have results that continue to point out that there are things that can be done. we have shown where better use of legislation and policy rules have resulted in savings that have been achieved a 19 billion. so we think that it is very

challenging. we think that we need to devote a lot of resources on the program in every way, whether evaluation, auditing, or investigating. we could certainly use more funds to do that, but we definitely believe it is a challenging program and will do our best to keep our eye on it. >> thank you, mr. chairman. i know my time has expired. i yield back. >> that concludes the first round. i will recognize myself for that purpose. private insurers and hmos face many of the same challenges that medicare does in managing its providers. in august of 2012 cn has announced a public-private partnership. many in congress applauded this overdue collaboration, but about a year-and-a-half later private plans and medicare have shared only the most basic information. how can see him as contractors be allowed to better cooperate and benefit from their knowledge

of suspect and untrustworthy providers? >> okay. well, in our report we recommend that cms shared that information on possible fraud issues with plans as well as law enforcement we think there is a benefit to continuing sharing. have to be careful what information you share, but i think there is way to do this. our office has that partnership and are working through there. we would be able to take any question the u.s. i am not the expert, but we do have people in our office that would be willing to come and meet with you or handle any question you may have. >> any other comments? >> i would like to mention the medicare advantage of counter data that is currently being collected because that will give

a broader view of what is going on and what is becoming a significant part of the medicare program on a much broader view than one plan has. and those dated, i think, all the great deal of promise if cms follows through and analyze and uses this data. >> how many contracts in offices are there? and are there required to be subject matter experts in their areas of contracts and what kind of turning to they received? and how are they held accountable? how is their performance assessed? >> that is not an issue that we have looked at. and i don't know how many contracts in officials there are. >> do you know? >> well, we are in the process now of looking at cms contracts. we are trying to provide you with a landscape look at how

many dollars they have, the type of contracts they are and who is administering the contracts. in addition we are also going to be looking at how the contracts have been closed or not closed. we hope within the next -- by the end of this year we will have a report will provide some detailed information on just the general information about cms and its contract in. >> there is a range of contract in vehicles at the disposal. some are very incentive driven. some are flexible. some are just cost plus contracts. can you talk a little bit about what parts of the process could be streamlined and modernized in order to hold contractors more accountable and achieve better return on investment for taxpayers jack. >> well, i don't think -- i will not be able to answer that right now. we have current work under way which also looks at contract in and held the contract and was

handled in ac a area. we hope that when we get that information it will provide some of their answers to some of the questions that you have. that is ongoing as well. >> the biggest contractors a cms of the medicare administrator of contractors. we did an evaluation of the implementation of contract to reform a few years ago. there is a rigorous process set up ha to evaluate the contracts. and the idea, there has been more recent work. and they have recommended some improvements, but they do have under the federal acquisition regulation an intensive process for awarding the contacting of contract and measuring the contract and awarding the fees under it. we are also looking, though, at whether they could be using some additional or different incentives and the program to

drive better performance. and we should have a report on that later this year. >> thank you. i now recognize the ranking member for five minutes for a final question. >> i wanted to go back to my questions about party, specifically this deal as proposed rule to strengthen party with regard to fraud. and i have heard some concern that requiring physicians to list of prescribed drugs to medicare beneficiaries actually be enrolled in the program is too much bureaucracy and interference for opposite -- positions and wanted to get your assessment. do you believe that it is overly burdensome to require a physician writing a prescription for which medicare would pay be subject to the some basic and rama standard? >> i think that we had previously made that recommendation. if we did that means a we think

it is appropriate. i think it is always a challenge to find the right balance, and that is what we seek to do here, to make sure that the program is properly safeguarded and that there is not too much burden. those are the things that we come to when we make a recommendation. >> i appreciate your insight. as i mentioned in my opening statement, this is an important topic which is why i introduced the part de prescription drug integrity act. i think that we can and have to do more on the party program to help address the prescription drug abuse epidemic. i have no further questions, mr. chairman. thank you. >> the next gentlemen. members do have other questions. we will submit them in writing. we ask that you promptly respond in writing. have remind members that they have ten business days to submit there questions for the record. members should submit there

questions by the close of business on tuesday, march march 18th. you have been addressing an important issue. we thank you very much for your work. we look forward to continuing to work with you. without objection this subcommittee is now adjourned. [inaudible conversations] >> the three elements of the triple package are a sense of the exception malady. you can get it from lots of different sources. it's a feeling the you are special and destined for special things. the second element is seemingly the opposite. a-of insecurity to offset that

feeling that you have not quite done enough yet, not quite good enough yet. the third element is impulse control, self discipline and the ability to persevere and resist temptation. >> individuals to have these qualities crop in america and predictably the second-generation has an interesting, creative destruction between their culture and american culture, especially second generation, and rant communities looking back at their parents' and grandparents' generation than saying we don't want to do what you told us. hair not interested in those jobs the you said were the only ones and make their own decisions whether it is to be a stand-up comic or artist. yet the aspirational qualities can help them achieve very different kinds of goals. >> superiority, and security,

and impose control, the triple package centered in assets and:00 eastern. part of book tv this weekend on c-span2. and for the book tv boat club we will be discussing the new biography of stoically carmichael. >> now, the head of the centers for medicare and medicaid with an update on pending health care regulations. he spoke for half hour and a conference vote -- posted by the federation of american hospitals. >> i would like to introduce someone knew many of us have considered a dear friend for many years.

marilyn is with us today. may have the most challenging job in washington. as administrators she has an $800 billion agency that runs medicare and medicaid and ensures coverage for roughly 100 million americans. additionally she is responsible for the coverage expansion under the affordable care act. as you know, she served as secretary of the department of health and human resources for the state of virginia. before that she enjoyed a 25-year career at a see a as a staff nurse, hospital administrator, president of ace al qaeda, central atlantic division and ultimately president of outpatient services she knows health care delivery, health care finance, how bureaucracy works and how to get

things done in the bureaucracy. that is why she is ideally suited unqualified to be in charge of an agency like cms. the intent part of the divide may be the new normal in washington. but maryland is an allied air, highly admired and respected on both sides of the aisle. last year the senate approved turn nomination overwhelmingly by a vote of 91-7, and she became the first senate confirmed cms administrator since 2006. today marks her third consecutive appearance at our annual meeting. for me it is a distinct honor because it is the first time i can introduce her as the cn as administrator. we are grateful she is here today and look forward to our remarks. please join me in giving a warm welcome to cnn as administrator.

[applause] >> good morning. i don't see the piggy bank that is supposedly appeared. you tried to hide it. i got it. first of all. let me say thank you. it is always a pleasure to be here. i have so many friends, but most importantly let me say, you have a great leader. he takes me to breakfast on their regular basis. part of that opportunity is, he is smart. he knows if he gets the early in the morning before i get preoccupied with the day's events he can actually -- and he prevents overhead. it is never an easy breakfast, but it is always very helpful.

so this is my first appearance. it is certainly very busy for years. the part that has been amazing is i have many consultants come forward and say how can i help you develop your strategic plan. my answer is always the same. in fact, aid has become a pretty major push back. the work that president obama and the congress put in place in 2009 and 2010 set the stage for the cms strategic plan. four years later it is still part of our choosing a plan. in fact my would argue that most of our works, some would say almost all with the exception of some reimbursement for quality was started in 2003 has given us

a framework for the past four years. this framework will extend into 2016 and 17 and beyond. so where are we with our chief japan? we continue to deal with an issue that is near and dear to my heart. we have made significant strides and have made some prior to october. we currently have over 4 million enrolled in the marketplace. you may have seen the recent blogger report about 9 million in medicaid. we have to be careful. it is obviously a function of real enrollment as well as new enrollment. if you read some of the other reports somewhere between two and a half and three and a half our new enrollments in medicaid. that is with 25 states in d.c.

expanding. our work is hardly done. many have you in this room have done exhaustive work for the remaining 25 states which have yet to expand. what i want to offer today is my assistance with those 25 states in any way that i can. sometimes it is better for me to stay out of the way. sometimes it is better for me to meet with governors and members of the legislature. i just want you to know how important this is to me and to see him as an that i am available on a moment's notice to help anybody and can . fixing the health care system is not just about access and it does not stop with guaranteeing that everyone has coverage. we still have to deal with the rising cost of health care. this is where you guys have stepped up each and every day. of want to pause and thank you for that because the work that we are doing around quality and

timing quality to payment, the work that we are doing a round ic g tan and meaningful use, you all i leaders in at work. i know that it has been exhaustive work. it has been hard work, but it is important. i understand it very well. let me talk a little bit about what we are doing and what you are doing more importantly to address the rising cost of health care. we must improve the way health care delivery is the minister and i think he chino that. you have been taking bold advances in getting that done. we cannot afford costly mistakes and reward quality over quantity or even think about building new delivery systems without you. yes stepped up and stepped up solidly for the past four years. that is the note i keep making

to hhs, my colleagues across town and to my colleagues on the help. i will continue to make that. we have already seen significant progress. let me pause. you have seen the national health expenditure report that spending grew over three and a half%, the slowest for years on record. i tell the chief actuary every day, at some point we have to start stop saying this is about the economy and start saying this is about the hard work of hospitals, providers, and others health care last year spending dropped from 73 to 72 of its gdp i can go on and on, but i think you get the idea. while we are doing at outcomes are improving. and adverse events are

decreasing. in 2012, as each of you know, we finalize programs that tie reimbursement for hospitals to readmission rates. the percentages of patients who have to return to the hospital within 30 days of being discharged, this 30 day admission rate has dropped in 2012 says. and 19% colored slightly greater for the past five years. what we have seen through the months of 2013 is that this trend continues. i know you are seeing it in and some cases feeling it. this translates to 130,000 fewer admissions. to every time out close to zero. this is the work that many of you not only have done that many of you have read.

i can switch from that to high style engagement now works of which each of your leader. we have 26 networks today. they have shown results such as decreases in central alignment's sections by more than 22% there is much more work to do that you will have been no leaders in this work. another area has been the health care conditions. it has been as secondary area of focus. over the past two years of 400,000 patients or avoided at a savings of $4 billion. you should talk about a ceos. many of you in this room are pioneers. we currently have over 360 organizations serving over 5 million beneficiaries. medicare a ceos participate in

ssp generating 128 million in net savings to the medicare program. a pioneer also save on hundred 559 and a gross rate of .3%. medicare grew at. 3%. our health care system would be in a much more financially sustainable place. all of this while each of you continue to perform an outperform quality standards we put in place. there are literally over a dozen programs under way. i know each of you feel that and many have you participate in more than one program. and i could talk about some of the examples that we have seen. the progress has been remarkable . all of these models follow a similar vein, link quality data reporting for payment.

the medicare modernization act, something we have embraced now call the hospital inpatient quality of reporting program. as you know, this program started with you all, as many things do, and it has now moved to have patients from health hospice long-term care etc. the next step in that journey is value based purchasing. it is the next linked of payment to quality where we link payments to performance, cost reduction and patient health outcome. hospital value based purchasing which began in 2012 is an example of this. today over 80 percent of a quality measures have improved substantially across the nation. i just want to stop and say thank you for that. [applause] >> we will next move into

position value modifier esrd quality incentive programs and others. fermi one have are more a exciting projects is what is going on in maryland today with all pier models. this is probably the first model that takes a state look at where we are, as many of you are aware , this is not the all payer model, not new to maryland. what is new is we change town that looks. it is tied more closely to how come when population health. we spend a lot more time with beneficiaries, and they won to enter the medicare program at close to 300,000 new enrollees per month. these are people who are much more active, engaged, and maybe what we have seen in the past and certainly much more computer literate. so we are spending a lot of time

trying to figure how to engage these beneficiaries in our work. some of that has gone on. we have seen lots of quality improvement. i will stop from moment because i want to just say i think the theme will not change. that theme will progress over the next several years, and we will continue to emphasize quality and payment. cost savings, we will pull in more long-term care, outpatient. i am not in many areas fee-for-service. some areas it may always be fee-for-service, but you will see a larger and larger commitment to outcome-based payment, quality-based payment. i think that is exciting and challenging as we go through the next few years. as we continue to talk about these things, i want to also

talk about the incentive payments. more than 62% of health care professionals and more than 86% of hospitals have no qualified for each are incentives payments. as most if not all of you in this room, today we have paid out about $21 billion to hospitals and providers. in that peak, more than 500 million has been paid to 78,000 practices. thanks to a patrick conway and the team at cms we are trying to outline these called the measures in no way that makes sense for each of you, less emphasis on the number of measures, more emphasis, if you will pardon the pun, on the quality of the measures, more emphasis on how come, what a single system so whether you are participating in medicare, medicaid, or private insurance

to misestimates cents. so let's look at what is ahead for 2014. despite these successes we still have many products and projects under way in 2014. i know you all think that it never ends, and sometimes i think it does not either, but the first is position sunshine. second is icy .. there is continued work with state and federal marketplace. fourth is ongoing progress and commitment to a meaningful use. let's take them in that order, and then i will conclude with a few thoughts around several things. i could not leave this podium without having that conversation position sunshine is a system designed to create a usable public tool a public file that discloses the financial interest or arrangement between those positions and suppliers. we are in the early stages of

file exchange, but the system will be operational in the fall of 2014. while it is a much more targeted system and platform i wanted everyone to be aware of the timeline. i think by now folks understand. i spoke last week, there will be no more delays in the system will be operational october october 1st. cms began installing and testing system changing to support back in 2011. as of october 1st of this past year of fee-for-service system the cn has were ready, but there has been a lot of talk about external testing lightly. and so i want to talk about that cms is taking a 3-pronged approach to testing. first is the internal testing and just described. second, we will be doing beta testing at the site, and tools

for the provider community. third, the testing which will occur over the summer and into the fall. this we can next week we are holding medicare testing week which will allow all providers, billing companies, clearing houses, and others the opportunity to determine whether cms will be able to accept there claims. later this month we will be soliciting volunteers to participate in testing. our goal is to select over 500 volunteers and over 25,000 test claims working with what's accomplished. a lot of work will continue in education and training. most of you are aware, most of you have volunteers working with us on state and federal based exchange. as open enrollment comes to a close on march 301st we are already engaged in work for next

year which includes work around the shop and will be continuing to make improvements in this site for open enrollment next fall. we have appreciate your support, and dressed, and hard work on this project. whether you are working with the federal base to exchange your state based exchange, many of you in this room made personal efforts in your community in setting to make sure that this program was successful. obviously over 4 million people is fantastic. we will have a march, and i look forward to picking his backup in the fall. this work has certainly changed but the look, feel, and ability to obtain health insurance for millions in this country. it stays to means you will not be surprised to hear me say that all the clinical programs cannot go anywhere without states to, particularly without exchange of

data systems with beneficiaries, the inch rubber ability is key to moving forward. and i no there have been many concerns. last week i announced that we would be doing what i will call exemptions for individuals who have legitimate concerns about being staged to. we understand that some of the providers may potentially struggle with establish safety reporting deadlines which is why we will permit flexibility in how hardship exemptions are determined for the 2014 reporting year. we will have more information on that in the upcoming weeks but i want to make you aware of that which is something that i announced last week. while we are glad to offer this flexibility and hardship exemption i want to stress to you all that we need the stage to an all of you to push hard for stage two to fully meet the requirements in 2015 which also

staged to certify products held better manage the transition to high ecb ten and obviously all of our work on the delivery system. i am asking each of you to help us get there, expand the messaging, reach providers and need more help to make sure we all get to the starting line together. so now i want to talk for a moment, switch gears entirely and talk about a l.j. to midnight will. i met with jeff last week and told him, this is an area where we are in the midst of taking a look. the three may not connected, but in some ways they are related. you have asked us to take a look, and we have, and it has not been adequate process. i know that many of you have been frustrated about how long it has taken to get somewhere on this issue. let me tell you a little bit about what we are doing and cms.

we are trying to take a multi- pronged approach to address concerns. we are in the beginning stages every competing our current to ensure that we have a smooth program transition and to reduce provider confusion. cms policy, and median document request. you will be getting that information. as we wind down one and moved to new we would want not for you not to have to deal with one system and move to another. we will pause in the new program request. additionally during this pause which will take some months we will be using this time to refine and improve the program. some of the improvements we are contemplating in discussing include allowing -- the auditor has to allow more time for the provider to respond to a denial.

we are looking at 30 days. auditors cannot receive contingency fees until the second level of appeal was exhausted. auditors must acknowledge receipt of records from you within three days. we will broaden there review beyond in patient claims. we are going to have quality standards about overturn rates, particularly at the first level. in the meantime, we will continue to use the results of the program thus far to make changes. when i asked for feedback, i was serious. now is the time to give us feedback about what we want as we disengaged from one contract and enter into the second stage. that jim midnight rule is another one. i have heard loud and clear that there are things that you do not like. the question is, what do you want on a going forward basis? how can we improve and what

changes would be helpful? hhs recently convened the across agency work group to look at the appeals process. we have much to do, need your help, and we have heard you. i am asking you to please give me feedback. you guys have been fantastic partners. our cost trends would not be where they are today without the work that you log on. our quality was certainly not be where it is today without the hard work inside each of your organizations. and so i am asking for our help in improving the process and any other areas you think we can benefit from. thank you for today and i will be happy to answer any questions. [applause]

>> take a couple. >> marilyn will take to questions. we have questions from the audience. >> a quick question. continuing care, the providers rely heavily on the network and the programs. a lot of talk around that. your thoughts on maybe a forward plan. >> yes. i understand that we need to keep adequate networks which has been part of what we are doing in round two and competitive bidding. competitive bidding obviously will continue. expanding to more markets. we recently sent out what we

call advance notice rulemaking to get feedback from individuals, including folks in this room on what is working around competitive bidding and how it is going to a betaken nationwide. the advantages, disadvantages, what would you like to see improved. please give us feedback on competitive bidding. we will be continued work. >> thank you. [applause] >> thank you. >> we do not have a criminal investigation law. we have a vast enforcement. we enforce the federal securities laws. broker-dealers, investment. we do not have a criminal authority. we have the power to bring with the approval of our commission

civil action, civil fraud action and negligence actions against those who violate the federal securities laws. ..

>> the whitehouse released their 2015 budget today. $3.9 trillion has been requested and reductions in army troop levels which house speaker john boehner has called irresponsible. the president and his economic advisors discuss the details in the hour long briefing.